This is a building shaped like a sphere, located in the campus of the software company, Infosys in Mysore, India (Photo credit: Wikipedia)
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Infosys, India’s second-largest software services exporter, reported a 27.4 per cent rise in quarterly net profit, meeting forecast, after customers ramped up orders to cut operational costs.
Bangalore-based Infosys said on Friday consolidated net profit for the fiscal fourth quarter ended March 31 rose to Rs 2,316 crore from Rs 1,818 crore a year earlier. (Read More)
Infosys, which is also listed on the Nasdaq, was expected to post a 27.5 per cent rise in profit in the quarter ended March to Rs 2,318 crore, according to Thomson Reuters data. Read: What SD Shibulal said
Here is what experts have to say:
Ambareesh Baliga, Chief Operating Officer of Way2Wealth:
Business environment is so pathetic; I don’t think it was too conservative a guidance. Discretionary order flows is going to be a problem ahead. What we can say for sure is that the ‘Best is behind for Infosys’. That will keep pressure on Infosys stocks.
R.K. Gupta, Managing Director, Taurus Asset Managament Co.:
The results are in line with what the market was expecting, but all eyes were on the guidance.
Eight to 10 per cent is an interesting guidance figure as normally Infosys is very conservative with their estimates. This figure makes me think that everything is well with the company.
Bhavan Suri, Analyst – IT Services at William Blair & Co
Guidance is muted. In dollar terms, Q4 was not ideal. EPS is coming down. I do remain concerned about the pressures Infy is facing – restructuring, troubled clients, competition from TCS, Accenture, and Cognizant. There is less clarity about the final budget of clients. So Infosys is being conservative in their guidance. The outlook isn’t clear.
Dollar guidance of yearly growth of 8-10 per cent and EPS of $3 12 cents – $3 17 cents is well below consensus. It looks like margins are down over 100bps for a year. Much lesser than expectations
Harendra Kumar, Managing Director -& Head – Institutional Equities & Global Research of Elara Capital:
It seems slightly optimistic for full year. So stocks should settle down. No one is expecting it to outperform. Clearly, the market sentiment is that investors prefer TCS, HCL Tech over Infosys.
Infosys business model is such that it is positioning itself for recovery. However, current macro environment is not suitable to its strategy.
Manish Hemrajani, Sr. Research Analyst, Oppenheimer & Co:
Absolutely, clearly a disappoint. 8-10 per cent topline revenue guidance in dollar is clearly a disappointment. EPS is well below consensus too. Infosys has held on to its high EBIT margin strategy by sacrificing a few revenue areas. But, clearly something lacking on strategy front.
Going by the guidance, you could say they are being cautious. But they are being overly cautious considering the demand expected.
Our expectations have been lower to begin with. We will have to bring it even more lower now.
Dhiraj Sachdev, Senior Fund Manager, HSBC Asset Management
The numbers are disappointing and definitely lower than expectations. Clearly there is no immediate recovery in sight for the industry with expectations that the environment will continue to remain challenging.
However, there is one thing we need to keep in mind this is the first quarter when the budgets are just prepared and in the planning stage so we will get more clarity on how the year will go when we are a few months into it.
Also with the bellwether taking a cautious stance the year will continue to remain a challenge for the industry.
Abhishek Shindakar, Analyst, ICICI Securities
The guidance is very low with respect to the consensus. Across verticals there is no growth in rupee terms. That suggests that the environment is challenging. The stock may be re-rated.
Arun Kejriwal, Strategist, Kris
The drop in the quarterly revenue sequentially in rupee terms is a little disturbing. The revenue guidance for FY13 seems reasonable.
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